TLDR:
- Alex Mashinsky, former Celsius CEO, faces sentencing on May 8 after pleading guilty to fraud charges
- The DOJ requests a 20-year sentence while his lawyers argue for 366 days
- Mashinsky earned $48 million by selling CEL tokens before Celsius collapsed in 2022
- Hundreds of victims submitted impact statements detailing financial losses
- Celsius paid $2.53 billion to 251,000 creditors in August 2024 as part of bankruptcy proceedings
Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius, is scheduled to face sentencing on May 8 for his role in misleading users and manipulating the price of the platform’s token. The case has drawn widespread attention in the crypto community as users debate the appropriate punishment for his actions.
The US Department of Justice has requested Mashinsky receive at least 20 years behind bars. This lengthy sentence would make the 59-year-old 79 by the time of release if he serves the full term.
Mashinsky’s legal team has strongly opposed this recommendation. In a May 5 reply memorandum filed in a New York district court, his lawyers argued he should receive no more than 366 days in prison.
They claim the DOJ hasn’t properly considered his status as a nonviolent first-time offender with a previously clean 30-year business record. The defense characterized the government’s submission as “venom-laced” and accused prosecutors of recasting Mashinsky as “a predator with an intent to target victims.”
As part of a plea agreement reached in December 2024, Mashinsky admitted guilt to two out of seven original charges. He pleaded guilty to commodities fraud and manipulating the price of CEL, Celsius’s native token.
Prosecutors have stated that Mashinsky earned $48 million by selling his holdings before Celsius collapsed in June 2022. The company would later file for Chapter 11 bankruptcy on July 13, 2022, owing $4.7 billion to creditors.
Victim Impact
The human cost of the Celsius collapse has been documented in hundreds of victim statements filed with the court. On April 23, US federal prosecutors submitted statements from victims who lost money when the platform failed.
Many detailed how they had entrusted their life savings to the protocol. They had believed Mashinsky’s assurances that their funds were safe.
The statements reveal mixed opinions on appropriate sentencing. While most called for harsh punishment, at least one suggested clemency for the former CEO.
“Many of the people who participated in this fraud, benefited from this fraud, and potentially orchestrated this fraud will get away with zero legal consequences,” said Daniel Frishberg in his April 24 statement. “Please do not allow Mr. Mashinsky to be one of those people. Please throw the book at him.”
In contrast, Artur Abreu wrote that “despite his mistakes, Mr. Mashinsky was, at times, the more conservative voice in an industry overflowing with unchecked greed.”
The Aftermath
In November 2023, a US bankruptcy court approved Celsius’ restructuring plan to repay customers. As part of this process, $2.53 billion was paid to 251,000 creditors in August 2024.
The Celsius case follows other high-profile crypto fraud sentences. Former FTX CEO Sam Bankman-Fried received a 25-year sentence in March 2024 for his role in that exchange’s collapse.
Mashinsky’s sentencing will be one of the first major crypto cases handled in the district since Jay Clayton became interim US Attorney for the Southern District of New York. Clayton, a former SEC chair and Trump appointee, has previously shown support for crypto on many issues.
Roni Cohen-Pavon, former Celsius chief revenue officer, also pleaded guilty to similar charges in September 2023. His December 11 sentencing has been delayed until after Mashinsky is sentenced.
The May 8 sentencing will conclude a case that has become emblematic of the challenges and controversies within the cryptocurrency lending sector.
